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Retail giants hypocritical over tax law protection

Date

Larry Graham

The self-interest shoe is on the other foot and international competition is hurting Big Retail, they want the tax laws to change.

The self-interest shoe is on the other foot and international competition is hurting Big Retail, they want the tax laws to change. Photo: Paul Sakuma

There are many things that I do not understand - for example, why do digital cameras in movies have motor drives to wind on the non-existent films?

Or why is the most suitable house for the Australian climate, the Queenslander not built anymore?

Or why does business always think that laws and taxes should change to better suit them?

Wesfarmers CEO Richard Goyder has called for reduced taxes and 24-hour trading to combat international competition from Amazon.

Wesfarmers CEO Richard Goyder has called for reduced taxes and 24-hour trading to combat international competition from Amazon. Photo: Christopher Pearce

There are answers for the first two, but for those of us who believe in private enterprise, the third remains a puzzlement.

In his recent address to the National Press Club, Richard Goyder, the CEO of Wesfarmers (aka Coles), has called for reduced taxes and 24-hour trading to combat the competition from internet retailers, particularly Amazon.

What is it with Australian businesses that they cannot understand that they are in business?  It is not as if they don’t pay executives enough. So why is it that when they hit a difficult time they want either protection or corporate welfare?

What retailers are confronted with in Amazon is just plain old-fashioned competition on the very unlevel playing field of business. 

As one of the first internet retailers, Amazon took major risks many years ago and they have suffered ups and downs and have nearly collapsed a number of times.

They have persevered and are now successful.

Unlike Amazon, supermarkets in this country have operated in a safe corporate duopoly, and consequently they dominate Australian markets.

I suspect that the major retail chains considered that fronting the fierce forces of genuine international competition was considered far too risky for them and they figured that there was a bigger short-term profit in not doing it. 

Having chosen that path and been well rewarded for it, surely it is not the government’s job to now come in and protect them?

Surely it is the companies’ job to reorganize themselves or face losing business?

Let us not forget that these are the very retailers that have been lecturing government on market forces for some time - and they have been very successful at it.

Because of corporate pressure, governments took no action when supermarket owners took control of fuel retailing. Successive governments said it was just market forces at work.

Those market forces caused many family-owned and independent petrol stations to go out of business to be replaced by corporately-owned fuel outlets offering dodgy and illusory discounts.

Curiously, the big two retailers newly-found desire for a level playing field did not make them give speeches calling for tax cuts for those who were being put out of business at that time.

But now that the self-interest shoe is on the other foot and international competition is hurting big retail, they want the tax laws to change. 

Why?

If only they would learn it, there is a big lesson in this for retailers: Market forces can make business profits go in both directions, up and down. 

They do not need protection from the Internet business any more than electrical retailers do. No company has a right to expect ever-increasing profits unless they adapt their business model to cater for change.

The retailing business has changed and Internet shopping offers customers the ability to buy the products that they want from whoever they want to deal with. 

No longer are customers’ choices restricted by what is on a retailer’s shelf, there is a world market operating and Australian retailers need to get on board or they will have to get out.

Being able to purchase the exact product that one wants without leaving home and then having it delivered to the door is a fantastic service that many are prepared to pay for.

In what is even worse news for retailers, for many people price is not the determining feature. This is a market that is driven by personal choice.

Of course if the government weakens and provides the tax reduction that big retail is seeking, the revenue shortfall has to come from somewhere.

That shortfall can only be funded from two sources.  These are either an extremely unlikely reduction in government spending or, the most obvious, a tax shift onto normal everyday taxpayers.

These taxpayers are also the very consumers who are already having their purchasing choices restricted by big retail.

Which begs the question of why those consumer’s taxes should be increased to advantage or protect the very businesses that cannot or will not provide them with the choices that they want?

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12 comments so far

  • Our big retailers WILL get government protection because they have made big contributions to the LNP coffers. Governments here do not represent voters, but we will have to pick up the tab for the cost of supporting big business. Both Labour and the LNP protect the interests of the fat cats. Democracy is something governments publicly espouse but never practice. Money talks.

    Commenter
    Whodaman
    Location
    Perth
    Date and time
    August 11, 2014, 10:48AM
    • Our big retailers get protection because it protects countless more everyday Aussies rather than a few fat cats. You have to actually look beyond the immediate impact to the 2 big company's pockets or what we pay for our goods. Less revenue = cuts to costs = job losses. Once jobs start to go you will probably blame the government for not doing enought to support these Aussie companies to keep the everyday Aussie workers employed.

      Commenter
      Brucey
      Location
      South Side
      Date and time
      August 11, 2014, 11:30AM
    • Brucey, the employment issue you raise may have some weight if Coles wasn't cutting down on staff all the time. Look at the self checkouts and the fewer numbers of staff to help customers. It's all about the bottom line and not about providing employment. We need more competition in the supermarket arena, which will mean more employment.

      Commenter
      Whodaman
      Date and time
      August 11, 2014, 3:20PM
    • Brucey, Economics 101: when one business model fails, another takes its place. Economics 102: markets evolve due to evolving demand and supply. Economics 103: jobs follow industry - as old industries die, employees migrate to newer industries. For example, we don't have milkmen delivering milk anymore, but we do have online retailers offering to deliver it (and other groceries) for you. (A classic example of demand-driven supply.)

      Fascinating stuff, economics.

      Commenter
      Boganomics
      Date and time
      August 11, 2014, 7:09PM
  • Yep they will support the four big banks, the two big supermarkets, bending the their every desire, the age of entitlements is only over for low and middle income families, and manufacturing businesses, with the one exception being Cadburys, Banks, Supermarkets and Mining will get all the leg up they need, courtesy of the attack on those that use or are employed by these very companies, not counting CEO's of course, they get paid more, by how much they can squeeze from workers, consumers and the Government.

    Commenter
    Lost2
    Date and time
    August 11, 2014, 11:37AM
    • It's been a carefully cultivated myth that business wants to compete. None of them do. Ever. They do it grudgingly and after exhausting all other ways to avoid it (ie badgering government to coddle them).

      Commenter
      Lee eel
      Date and time
      August 11, 2014, 11:46AM
      • Go on the internet and Google what European countries are paying for groceries and other supermarket goods to see for yourself how Coles and Woolworths rip us off here in Oz. Both own massive liquor retail outlets, petrol retailing outlets they now want to corner the insurance market and get into banking. This is what is called corporate greed at it's worst monopolizing a market to screw the consumers for all they can bear. We have a Government who lives of the ""donations"" these corporate crooks provide, so unless you vote Greens or Independent you won't get anything like fair and proper competition in this country. A country that charges it's consumers $9.00/kg for apples, $6.90/kg for potatoes, $ 14.00/kg for sprouts is engaging in criminal extortion, all products grown locally, checking the European supermarkets their today prices for apples is $0.49/kg $0.29 /kg for grade A potatoes and $ 0.79/kg for sprouts! These are all staple healthy fruit and vegetables, at these prices very few Aussie families will be able to afford them and resort to the cheap chunk food aka Maccas etc. Where is the Government here, preaching on a daily basis to feed your family at least 5 Veggies a day, at Coles and Woolworths prices this is simply UNAFFORDABLE. And Goyder who sends millions in donations to Israel is asking for MORE Government protection from competition, how dumb are you the voters????????

        Commenter
        Arthur Insidious
        Date and time
        August 11, 2014, 11:56AM
        • In Europe, producers are heavily subsidised, often receiving more money from the government for their production than from their sales. In Australia, this isn't the case, so our prices for fruit and veg are higher across the board.

          If Coles and Woolies were getting so fat off significantly higher prices, then why aren't independents a) cheaper and b) increasing in number?

          Commenter
          Nick
          Location
          Perth
          Date and time
          August 13, 2014, 9:40PM
      • Glad the big two have some competition. They monopolise food, petrol, hardware, alcohol, clothing, etc. and it's time someone gave them a run for their money.

        Commenter
        Catherine
        Date and time
        August 11, 2014, 2:51PM
        • These greedy corporations are allowed to generate obscene profits at the expense of the people and the economy. They even convinced a lot of people to make the government cut taxes to the uber rich mining companies and their (mostly) overseas owners - amazing!
          "Our prices are down" one of them states - are they? No way. I go to the farmer's markets whenever I can as they are much cheaper. All company profits should be stated publically. Maybe then people will start demanding fairer pricing for food, banking and petrol prices. At least tax them appropriately. We are being ripped off - make no mistake about that.

          Commenter
          Sonofswift
          Location
          Perth
          Date and time
          August 12, 2014, 1:44PM

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